Inequality, Public Service Provision, and Exclusion of the Poor

Abstract

The rhetoric of inclusive growth has no doubt caught the imaginations of development planners and policy makers almost everywhere in the world. Recent policy and research documents from various institutions, ministries, individual researchers are abound with mention of inclusive as the most important ingredient for development. In India, the country which has observed sustained high growth of GDP for almost a decade now, every recent policy document has a reference to the target of making the growth pro-poor and inclusive. This continuing fascination about inclusive growth on the part of the researchers and policy-makers indicates that the economics community now recognizes the fact that the market-driven growth in some developing countries is not enough for development. In fact, there are now several evidences from individual countries which show that growth elasticity of poverty reduction decreases with high growth. Moreover, that higher income inequality reduces the poverty impact of growth is also well-documented. So inequality enhancing high growth not only may lead to adverse poverty impacts, but also has the potential to reduce the poverty impact of future growth.

Keywords

Public Service Income Inequality Income Growth Indirect Utility Club Member

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